Regardless of your opinions on the new government’s first 100 days in power, one of the most undeniably significant moments came near the end of the 100 days – The Employment Rights Bill.

The Employment Rights Bill was officially unveiled by the government on 10th October 2024, claiming to be “the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy,” according to Deputy PM Angela Rayner. It’s one element of Labour’s broader proposed employment reforms, dubbed by the government as the Make Work Pay Plan.

But what does this mean for employers? What updates must be made to the workplace, employee contracts and permissions? And, crucially, when do these changes come into effect?

We wanted to cut through the fat and break down the jargon into simple terms for employers – highlighting what is changing and how employers must respond.

To get the answers, we spoke to Lisa Branker, Head of Employment and HR at Newcastle employment law solicitors Beecham Peacock. They’ve collated the most important measures to be introduced, including commentary on how to make sure your business is ready to comply with the new legislation.

Zero-hours contracts and flexible working

Zero-hours contracts, while not being banned outright, will also be affected by new flexible working measures.

The new rules will end “one-sided flexibility”, meaning:

• Guaranteed hours: zero-hours and low-hours contact workers must now receive a “guaranteed hours contract which reflects the hours eligible workers regularly work over a reference period.”
• Shift notice and cancellation payments: zero-hours and low-hours contract workers now must receive reasonable notice of shifts, and payment for shift cancellation and curtailment.
• Flexible working: employees can already request flexible working from their first day in a job and employers may continue to rely on one of the eight existing grounds to refuse. However, employers now can only refuse if it is reasonable for them to do so placing a greater burden on employers to justify rejection of requests.

What does Beecham Peacock advise?

“The first two changes here regarding zero- and low-hours contracts are more likely to affect hospitality employers and other service industry businesses,” says Lisa Branker. “These are employers that usually hire general managers to produce rotas and schedule shifts, so these managers must be informed and prepared to deal with these changes.

“Firstly, give managers the time to review and adjust their scheduling practices to ensure that workers receive sufficient notice of shifts in the future – this will stop your business from having to pay for shifts cancelled on short notice,” Branker continues. “Managers should also use this time to monitor hours worked by those on flexible contracts. By tracking the average working hours of flexible contract workers, managers will be able to identify those who qualify for a guaranteed hours contract. Once these processes are identified and agreed upon, new contracts should be drafted to reflect the changes.

“Secondly, prepare a process for shift cancellation payments. In an ideal world, if step one goes perfectly, a shift cancellation won’t ever happen – but that’s in an ideal world, and the service industry is often unpredictable. Ensuring the payroll system is equipped to handle shift cancellation payments will keep your business out of potential legal trouble. As a precautionary measure to help end possible disputes, document shift allocations and alterations with detailed notes, notice periods of shift changes and cancellations for proof of good practice.

“Regarding flexible working requests, all employers must update their company policy on flexible working,” says Branker. “Your new policy must be transparent, clearly stating your reasons for refusing any requests for flexible working.

“If workers can feasibly complete their responsibilities with a flexible working model, employers must develop a flexible working plan. This could mean developing unique hybrid working conditions, creating policies around part-time and remote roles, or an approach to accommodating unique arrangements. As always, record whether a flexible working request was accepted or refused. This documentation will help if a refusal is challenged later on.”

Family-friendly rights

There are also wide-sweeping reforms in the Employment Rights Bill aimed at protecting families, with new families seeing particular boosts to workplace protections.

These protections concern:

• Protections for mothers: mothers will have additional protection from dismissal during pregnancy, when on maternity leave and for a period after maternity leave.
• Expanded paternity/parental leave: previously, a father must have been working for an employer for 26 continuous weeks before being eligible for paternity leave (12 months for parental leave). Now, paternity/parental leave will be a day one right.
• Right to bereavement: parental bereavement leave is currently available to eligible employees who have lost a child under 18 years of age or have a stillbirth after 24 weeks of pregnancy. The bill will introduce a right to allow other employees who have experienced a family bereavement to take work leave to grieve.

What does this mean?

“Firstly, HR and managerial staff must be informed of these new changes,” says Branker. “Employers must ensure managers are aware of the risks of dismissing any employee during a protected period and ensure processes are in place to record those employees who are within a protected period.  Employers should immediately update internal policies to reflect these changes for example redundancy, paternity/parental leave policies.

“Management must be instructed to communicate all these changes with staff once they come into effect. This will ensure that your company remains transparent with its staff, as well helping to build morale within your team,” Branker adds.

“Finally, update your bereavement leave policy to encompass these changes. Managers and HR must be trained to compassionately process these new requests, as pushback on legitimate requests will cause friction and further upset for employees.”

Unfair dismissal and firing and rehiring

Firing and hiring processes have been widely criticised, especially in recent years post-pandemic. The government has decided to address the concerns of workers, introducing reforms affecting unfair dismissals.

These changes include:

• Unfair dismissal: employees can now claim unfair dismissal in an employment tribunal without working for the employer for a minimum of two years. Instead, there will be a “modified” test for unfair dismissal if the employee is dismissed during an “initial period of employment” for breaching conduct, capability, illegality or some other substantial reason.
• Fire and rehire: if an employee is dismissed for refusing to accept a variation to their contract, this dismissal will now automatically be treated as unfair, unless the employer can show evidence of financial difficulties and demonstrate that it could not reasonably have avoided the need to make the variation.
• Collective redundancy: collective consultation and notification requirements now apply when an employer is proposing to make 20 or more people redundant, regardless of whether the redundancies are taking place at one establishment or not.

“Many of these changes, especially changes to collective redundancy, are more likely to affect large, multi-site businesses rather than small to medium-sized enterprises (SMEs),” says Branker. “Regardless, these are significant changes which must be considered by all employers.

“Now is the time to review your policies and procedures before these changes come into effect to protect your business interests. For example, clear and consistent procedures for dealing with underperformance or misconduct must be introduced,” Branker continues. “This will help protect employers from Employment Tribunal claims.

“If you find yourself in a situation where you need to vary the terms of an employee’s contract of employment, you must now gather financial evidence to justify the variation. Alternatively, consider writing a consultation procedure for any proposed variations,” Branker adds.

“Finally, revise your redundancy planning procedures to take into account the extended circumstances in which employers will be obliged to carry out consultation when proposing a collective redundancy.”

Fair pay and workplace equality

The bill also proposes changes to fair pay and workplace equality. There are many smaller changes within these sections, so Branker has chosen the most relevant ones to take note of.

These changes include:

• Gender pay gap and equality action plans: enforcing larger companies to publish equality action plans related to gender equality (including gender pay gap and menopause).
• Tip allocation: employers will be required to consult with trade union or worker representatives before producing the first version of a written policy on the allocation of tips and are obliged to review the policy at least once every three years.
• Statutory sick pay (SSP): all employees will be able to claim SSP from day one of work.

“Larger companies should now get into the practice of producing and reviewing a cohesive gender pay gap report. This should accompany a detailed equality action plan and measurable goals to meet them,” says Branker.

“Proper and guaranteed tip distribution to employees (not management) should now be clearly stated in employee contracts together with a transparently drafted tipping policy.

“Finally, update your SSP policy to align with day one eligibility. This includes informing management and HR of the changes well in advance of the date the law comes into effect.”

When will these measures come into effect?

“There is no set date for when the bill will come into full effect. Some of the changes in the new bill will not come into force until 2026 at the earliest with the unfair dismissal reforms expected to be ‘no sooner than autumn 2026’,” says Branker. “However, consultation on the various reforms outlined in the bill is to commence in 2025 when employers will be given the opportunity to share their views as part of the consultation process.”

How prepared is your business for these employment law changes? As always, if you are unsure how to best update or implement your employee contracts or business policies, contact a respected employment law solicitor for advice.